AN ACT Relating to liability of directors of cooperative associations; and amending RCW 23.86.050, 24.32.070, 23.86.030, and 24.32.020.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

Sec. 1. Section 2, chapter 19, Laws of 1913 as last amended by section 171, chapter 35, Laws of 1982 and RCW 23.86.050 are each amended to read as follows:

Every association formed under this chapter shall prepare articles of association in writing, which shall set forth:

(1) The name of the association.

(2) The purpose for which it was formed.

(3) Its principal place of business.

(4) The term for which it is to exist which may be perpetual or for a stated number of years.

(5) The amount of capital stock, the number of shares and the par value of each share.

(6) Any provision, not inconsistent with law, which the incorporators elect to set forth in the articles of incorporation for the regulation of the internal affairs of the association, including provisions regarding:

(a) Eliminating or limiting the personal liability of a director to the association or its members for monetary damages for conduct as a director: PROVIDED, That such provision shall not eliminate or limit the liability of a director for acts or omissions that involve intentional misconduct by a director or a knowing violation of law by a director, or for any transaction from which the director will personally receive a benefit in money, property, or services to which the director is not legally entitled. No such provision may eliminate or limit the liability of a director for any act or omission occurring before the date when such provision becomes effective; and

(b) Any provision which under this title is required or permitted to be set forth in the bylaws.

Sec. 2. Section 7, chapter 115, Laws of 1921 as last amended by section 2, chapter 132, Laws of 1959 and RCW 24.32.070 are each amended to read as follows:

Each association formed under this chapter must prepare and file articles of incorporation, setting forth:

(1) The name of the association.

(2) The purpose for which it is formed.

(3) The place where its principal business will be transacted.

(4) The term for which it is to exist, which may be perpetual.

(5) The number of directors thereof, which must not be less than five and may be any number in excess thereof, and the term of office of such directors, which term shall not exceed three years as may be provided by the bylaws of the association.

(b) Any provision which under this title is required or permitted to be set forth in the bylaws.

(7) If organized without capital stock, whether the property rights and interest of each member shall be equal or unequal; and if unequal, the articles shall set forth the general rule or rules applicable to all members by which the property rights and interests, respectively, of each member may and shall be determined and fixed; and the association shall have the power to admit new members who shall be entitled to share in the property of the association with the old members, in accordance with such general rule or rules. This provision of the articles of incorporation shall not be altered, amended, or repealed except by the written consent or the vote of two-thirds of the members voting upon such change after notice of the proposed change shall have been given to all members entitled to vote thereon, in the manner provided by the bylaws: PROVIDED, That if the total vote upon the proposed change shall be less than twenty-five percent of the total membership of the association, such change shall fail of adoption.

((~~(7)~~)) (8) If organized with capital stock, the amount of such stock and the number of shares into which it is divided. The capital stock may be divided into preferred and common stock which stock may be of a fixed par value or nonpar value. If so divided, the articles of incorporation must contain a statement of the number of shares of stock to which preference is granted and the number of shares of stock to which no preference is granted and the nature and extent of the preference and privileges granted to each.

((~~(8)~~)) (9) The articles must be subscribed by the incorporators and acknowledged by three or more of such incorporators before an officer authorized by the law of this state to take and certify acknowledgments of deeds and conveyances; and shall be filed in accordance with the provisions of the general corporation law of this state; and when so filed the said articles of incorporation, or certified copies thereof, shall be received in all the courts of this state and other places, as prima facie evidence of the facts contained therein and of the due incorporation of such association.

Sec. 3. Section 17, chapter 19, Laws of 1913 and RCW 23.86.030 are each amended to read as follows:

No corporation or association organized or doing business for profit in this state shall be entitled to use the term "cooperative" as a part of its corporate or other business name or title, unless it has complied with the provisions of this chapter; and any corporation or association violating the provisions of this section may be enjoined from doing business under such name at the instance of any stockholder or any association legally organized hereunder. Any association legally organized hereunder shall be deemed nonprofit for the purposes of RCW 4.24.264.

Sec. 4. Section 2, chapter 115, Laws of 1921 and RCW 24.32.020 are each amended to read as follows:

Five or more persons engaged in the production of agricultural products may form a nonprofit, cooperative association, with or without capital stock, under the provisions of this chapter. Such an association shall be deemed nonprofit for the purposes of RCW 4.24.264.